The price rise is not quite a return to the glory days, but it's well ahead of DairyNZ's estimate of $5.05/kg that the average farmer needs to break even. Photo / John Stone
After two miserable seasons, dairy farmers were this year given hope that they might finally be able to dig themselves out of the effluent.
The regular GlobalDairyTrade auction has now delivered four significant price rises in a row, and Fonterra farmers can look forward to a total 2016-17 payout of
$6.50-$6.60 a kg of milksolids, before retentions, a huge leap from $4.30 in 2015-16. Other dairy processors are expecting payouts in much the same territory.
It's not quite a return to the glory days - that would be Fonterra's $8.50/kg in 2013-14 - but it's well ahead of DairyNZ's estimate of $5.05/kg that the average farmer needs to break even.
It isn't all good: soggy spring weather depressed production and the Reserve Bank doesn't like dairy's debt mountain - $39 billion, as farmers borrowed more to get through the lean years. But while it will take a couple of good seasons to repair the damage done, at least things are looking up.
Chris Lewis, president of Federated Farmers Waikato, offered a suitably wary response in November: "We are at a stage where we are almost starting to believe it," he said.
